In the last entry I wrote a fairly abstract piece trying to define “Cloud computing.” This time, I’ll give a concrete example of what we’re thinking about.
Benefits administration is a headache for HR people, balancing the needs of the employee for great coverage with the needs of the organization to maintain a reasonable cost profile. To make things simpler, organizations often integrate the benefits provider’s online capabilities with their HRMS, eliminating some of the pain associated with keeping employee records accurate.
The tradeoff in the on-premise world is an IT cost — owning and managing the integration. Not only is there IT cost involved initially, any addition or change to that benefits provider requires a new integration. The result: massive upfront planning, an expensive integration and a lot of IT inertia when it comes to making business changes later.
What we can do is take that integration burden and move it up into the cloud. Workday Benefits Network is a good example. It provides a set of pre-built, hosted integrations to well known Healthcare and Financial Benefit providers.Benoit Lheureux of Gartner would call these “Packed Integrating Processes (PIPs) — a form of prebuilt integration.”
This means a couple of very valuable things for the customer.
But how is this different from what can be achieved with an On-premise solution?
In the Cloud computing world, a whole new set of possibilities emerge.
Cloud Computing isn’t just about changing the technology so that costs and risks of ownership get transferred from the buyer to the provider. In the above example, points 1 and 2 speak clearly to how those costs and risks move from the customer to the vendor but are diminished through aggregation. Cost savings are good, especially in the current economic climate, but they are not transformative. What is transformative about Cloud computing is that it introduces new business model opportunities. Points 3 and 4 above outline how, with the right technology, a whole new business model around Benefit provision can emerge.